The futures market was trading well in the red this morning, hurt by negative pre-market trading in a few key technology names. That included Google parent company Alphabet (GOOG), which turned in an underwhelming fourth-quarter performance and provided tepid guidance. Notably, growth in the company’s cloud business has slowed. Meanwhile, fears of a growing trade war with China have affected other U.S.-based technology companies, such as Apple (AAPL), as that country has considered a probe into that company’s App Store. However, some earnings results were positive, including those from The Walt Disney Co. (DIS), which showed growth in its streaming offerings, though revenues declined at its theme parks division, as hurricanes impacted operations in the fourth quarter.
The ADP (ADP) payroll report was released this morning. It showed that around 183,000 jobs were added during January to private payrolls. This easily topped the Street’s expectations of 150,000 jobs, and December adds were 122,000, showing an increase driven by companies needing to hire more to satisfy customer demand. Pay for job stayers increased 4.7% year over year, while those who changed jobs increased their pay by 6.8%. These factors are a key input into inflationary data. The leisure/hospitality segment of the economy added 54,000 jobs, and the trade/transportation/utilities segment added 56,000, suggesting these are the areas of the largest growth. Overall, the market moved higher on the news but remained in the red, indicating a weaker start to the trading day.
Readers should also note that the Institute for Supply Management’s Services Index will be released once the market opens, and a few Federal Reserve Regional Presidents will give commentary on the market. These have the potential to impact trading later today.
The stock market moved quickly higher yesterday, following announcement of a delay of tariffs on goods from Mexico and Canada. That news buoyed sentiment, and several earnings reports were viewed positively by the markets. The major market indices then trended higher throughout the day and ended near their apexes. Overall, the S&P 500 increased 43 points (up 0.72%), the NASDAQ was higher by 262 points (up 1.35%), and the Dow Jones Industrial Average rose by 134 points (up 0.30%). Additionally, market breadth was quite robust, with advancers outpacing decliners by a 2.4-to-1.0 ratio. Energy issues were amongst the best performers on the day, while utility stocks were amongst the weakest.
In commodity news, oil prices rapidly rebounded yesterday following a severe slide on Monday following the news of tariffs on Mexico and Canada. The delay of these tariffs caused traders to unwind their trades quickly. Elsewhere, U.S. Treasury bond yields were largely lower as traders moved into the secure asset. The Chicago Board Options Exchange Volatility Index, or VIX, also known as the fear index, fell rapidly as traders demanded less options protection.
Several economic reports will be released in the days ahead. These include initial jobless claims and U.S. productivity on Thursday, while U.S. employment figures and the unemployment rate for January, along with U.S. hourly wage growth, will be released on Friday. Elsewhere, companies’ fourth-quarter results and guidance for 2025 continue to come in. - John E. Seibert III
At the time of this article’s writing, the author held positions in one or more of the companies mentioned.
CLICK HERE for more information on our services or call 1-800-VALUELINE (1-800-825-8354). Our account managers are available Monday through Friday, 8:00 AM to 6:00 PM Eastern Time.
